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LAM(Initiate)Initiate
9 July 2024

Q1. I have been claiming Div 40 and Div 43 deductions on my investment property, in-line with a depreciation schedule. Do these deductions reduce my cost base, for CGT calculation purposes?


Q2. A contract for sale on my investment property is dated 7th June 2024. For my 2023-2024 tax return, do I still claim all income and deductions up to the 7th June 2024 (including the Div 40 and Div 43 items) - and further reduce my cost base for these final Div 40 and Div43 items claims as a deduction?

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Liked by AnnieOWNER
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Most helpful reply

Taxduck(Taxicorn)Taxicorn
10 July 2024

Depreciating assets (Div 40) are considered as separate assets for the calculation of CGT. At time of sale the value of the depreciating assets at time of purchase and at sale are removed from the cost base and capital proceeds.

You also subtract from the cost base capital works deductions that have been claimed or could have been claimed.

While you receive rental income the depreciation can be claimed.

This link below is to an ATO information sheet on CGT for rental properties which explains Q1 (reduced cost base)

https://iorder.com.au/publication/Download.aspx?ProdID=75357-09.2021


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Most helpful reply

Taxduck(Taxicorn)Taxicorn
10 July 2024

Depreciating assets (Div 40) are considered as separate assets for the calculation of CGT. At time of sale the value of the depreciating assets at time of purchase and at sale are removed from the cost base and capital proceeds.

You also subtract from the cost base capital works deductions that have been claimed or could have been claimed.

While you receive rental income the depreciation can be claimed.

This link below is to an ATO information sheet on CGT for rental properties which explains Q1 (reduced cost base)

https://iorder.com.au/publication/Download.aspx?ProdID=75357-09.2021


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Div 40 and Div 43 deductions and impact on CGT cost base | ATO Community